US senator accuses China over solar jobs

Ron Wyden, the Democrat Senator for the state of Oregon, has attacked China over what he called “a myriad of subsidies” that have enabled solar manufacturers in the country to take market share from international competitors through below-market pricing.

Wyden publicized a policy brief detailing the issue while on a tour of a large new panel assembly built by the photovoltaics company SolarWorld, which recently opened at the firm's manufacturing campus in Hillsboro. Touring the 97-acre site alongside Lisa Murkowski, the Republican Senator for Alaska, Wyden said: “China’s gains in the clean energy industry – particularly solar – are coming at the expense of American and other world producers of this technology.”

SolarWorld is actually headquartered in Bonn, Germany, and is fully vertically integrated – from raw silicon production through cells, modules, panels and systems. In 2010 it saw a sharp increase in demand for its products, with shipments of wafers and modules rising 42% to 819 MW, as well as a 50% jump in profits.

However, this year it faces a major challenge, with prices of wafers, cells and modules falling fast on a surplus caused to some extent by increased production at its larger Chinese rivals.

The German firm has been manufacturing wafers and cells at Hillsboro since October 2008. It has now tripled capacity at the site to 350 MW and employs around 1000 people.

Although there is a widespread perception that Chinese companies have lower production costs (regardless of any subsidies), Gordon Brinser, the president of SolarWorld Industries America, claims that this is not quite correct. He says that the cost structures of US and Chinese producers are actually very similar, once shipping costs are taken into account.

“Government central planning and massive state subsidies and sponsorship have enabled Chinese manufacturers to drive their products at artificially reduced prices into a wide-open US market,” Brinser said, although it would be equally true to say that the entire global solar industry remains entirely reliant on government subsidies, so long as solar electricity requires financial mechanisms like Germany’s feed-in tariff to establish itself in the energy market.

SEIA report criticism
Wyden’s brief does not detail any specific policy ideas for reacting to the impact of Chinese manufacturers in the photovoltaics sector, instead focusing on the fast-growing imports of cells and modules from the country as the US solar market has expanded.

That market is expected to double, in terms of PV installations, to nearly 2 GW in 2011. At the same time, imports from China have tripled in dollar value.

Citing statistics from the International Trade Commission, Wyden’s brief notes that year-to-date imports of cells and modules from China are worth $1.65 billion – up from $550 million in the same period last year. Between 2006 and 2010 that figure grew by a factor of nearly 20.

Wyden also claims that the US trade deficit in exports of solar-related electrical components has grown five-fold since 2006, and criticizes the methodology of a report published earlier this year by the US Solar Energy Industries Association (SEIA) in collaboration with Greentech Media that came to a different conclusion, and which suggested that the US actually enjoys a trade surplus with China regards PV technologies (see figure).

“Unfortunately, for the SEIA report to suggest such a scenario, its authors relied on an unprecedented, broad measure of US exports, which included raw materials like silica and US machinery,” states the policy brief prepared by Wyden’s office. “Under the SEIA methodology, US exports of fabric, steel and automotive plants could be measure as ‘auto industry exports’.”

Wyden also highlighted a recent complaint to the World Trade Organization (WTO) by the Office of the US Trade Representative (USTR) over nearly 200 subsidy programs that China has failed to notify the WTO of, as required under the body’s rules. In a statement announcing the US complaint, which also cited India, USTR’s Ron Kirk described the lack of transparency as “simply intolerable”.

“It is past time for China and India to be transparent about their subsidy programs, and that includes meeting their notification obligations like other WTO members,” Kirk added. “China and India are among the largest exporters in the WTO, and it is simply not acceptable that they continue to evade their transparency commitments.”

Regardless of the true level of state subsidies in China, the fast-falling PV prices this year will make the technology more attractive to homeowners, which should in turn provide more work for installation companies. SEIA president Rhone Resch, addressing the Solar Power International 2011 conference and trade show in Dallas on October 17, said that the PV industry now accounted for more than 100,000 American jobs.